Monday, September 28, 2015

Francis
is perhaps the best loved Pope since John 23rd. John was Pope during
my generation’s coming of age – 1958-1963. His predecessor, Pius XII, had been
seen by many as stern and too accommodative to the Nazis during their
occupation of Rome
during World War II. John, in contrast, smiled; he was charismatic and he moved
the Church into the present.

What
sets Pope Francis apart, besides his beatific countenance, are his simplicity
and his love for the poor. In stooping to kiss the wheelchair-bound young girl
at St. Patrick’s in New York and the boy with
cerebral palsy in Philadelphia,
he showed his love for the less fortunate.

In
his talk before a joint session of Congress, like the true Jesuit he is, Pope
Francis threaded the needle of political partisanship with ease, parceling out
comfort and chastisement in roughly equal doses to both sides of the aisle. To
the Right, he spoke of the sanctity of life – from its inception. To the Left
he talked of climate change and income inequality. (As to the latter, I wonder
if Pope Francis, in his youth, had read A
Gentleman of Leisure, a novel by P.G. Wodehouse, written in 1910. Wodehouse
has Jimmy Pitt say: “Besides, a burglar is only a [practicing] socialist.
Philosophers [politicians] talk a lot about the redistribution of wealth. The
burglar goes out and does it.”)

In
that talk, Francis highlighted four Americans, two of the iconic variety and
two lesser knowns, with more questionable curricula
vitae. Abraham Lincoln and Martin Luther King are recognized as major
forces in American history, with universal appeal. However, in mentioning
Dorothy Day, a Catholic convert, and Thomas Merton, a Cistercian monk, the Pope
retreated, in my opinion, to ideology. Dorothy Day, along with Peter Maurin,
was a founder of the Catholic Worker Movement. She fought for labor, at a time
they needed support, and she believed in social justice. But she was also an
anarchist, pacifist and redistributionist. In the 1950s, in decidedly less than
pacifist prose, she wrote about the need to overthrow “…this rotten, decadent,
putrid industrial capitalist system…” She was a supporter of Fidel Castro and
Ho Chi Minh. Typical of many on the Left, she was enamored with what ruthless
men said, rather than considering what they did. Despite one of two Cistercian
Orders having fallen victim to Chinese Communists, Merton flirted with
Communism, as a member of the Young Communist League. In elevating Ms. Day and Father Merton to the
same podium as Lincoln and King, the Pope failed to heed Mark Twain’s
admonition: “Actions speak louder than words, but not nearly so often.”

At
the United Nations, the next day, Pope Francis spoke of the need to maintain a
dialogue among nations; that its purpose is to serve the common good; and that
it must do this while adhering to the rule of law – with its limitation on
power. He avoided the troubling truth that many of the UN members are states
without human rights – intolerant states that treat women as chattel, with a
few committing Christian genocide. Instead, he highlighted man’s responsibility
for the environment in which he lives – that a “true right of the environment”
does exist. He pointed out that man “can only survive and develop if the ecological
environment is favorable.” He omitted any mention of natural evolutionary
changes. He added: “Any harm done to the environment, therefore, is harm done
to humanity.” He blamed the industrialized West. He assumed that the misuse and
destruction of the environment are “also accompanied by a relentless process of
exclusion” – that it is the “thirst for power and material prosperity [that]
leads to the misuse of available natural resources and to the exclusion of the
weak and disadvantaged.” It is curious that Pope Francis would not acknowledge
the role nature has played in climate change over millions of years – the
relevance, for example, of the Milankovitch cycle, a theory that states climate
change is due, in part, to the earth’s elliptical orbit, the tilt of the
planet’s axis and its changing direction. Man has certainly influenced climate,
but the flood that made Noah famous was not a consequence of coal from West Virginia.
Perspective and science should be permitted into the realm of environmental
ideology. The Pope played to the political elite.

Leaving
the UN, Francis traveled to Our Lady Queen of Angels in Harlem,
a Catholic school that serves 295 mostly Black and Latino students. Before the
assembled members of the UN, the Pope was serious, but in front of the children
in Harlem he was joyous; he was in his
element. That visit, if the expression on his face revealed his inner soul, may
have been the highlight of his trip. The school visit was followed by a tour
through Central Park and then the celebration of a mass at MadisonSquareGarden.

On
Saturday, the Pope flew to Philadelphia
where he spoke at Independence Hall. He spoke of the religious tolerance that
place represented. He talked of the value that immigrants have brought to America and the
importance of their cultural traditions. At the Vatican-arranged World Meeting
of Families Festival, he emphasized the crucial role played by families. Off-script,
he added: “The family is like a factory of hope, a factory of Resurrection.”

Like
all of us, the Pope is a product of his environment, in his case Argentina and
the political and economic upheaval that encompassed that country from his
birth to the present. Six years before he was born, seven decades of civilian,
constitutional government came to an end when a military junta took over in
1930. This was early in the Great Depression that gripped the world. Argentina has
what is known in economics as “comparative advantage.” Their soil and weather favor
agriculture. The country is rich in natural resources. By 1913, Argentina was
the world’s 10th wealthiest nation, when measured by per capita
income. Thirty years later, when Juan Peron seized power, the rule of law was
abandoned and property rights curtailed. The wealth of the country fell into
the hands of special interests. Corporate/government cronyism has prevailed
since. This was the capitalism Father Jorge Mario Bergoglio knew as a young
priest.

We
can only hope that the Francis’ visit to the U.S has allowed him to see the
fruits that a democratic, free-market capitalist society offers, especially to
the poor and underserved. Perhaps he is fearful of corporate special interests gaining
too much power? That is obviously a risk. But what if a subtler, more insidious
risk comes from within – from a bloated government already restrained because
of debt and unfunded obligations, and via a President who does not feel
constrained by the law he has sworn to uphold?

Thursday, September 24, 2015

The
short answer is ‘no.’ At least, that is my opinion. We all agree that STEM
courses (science, technology, engineering and mathematics) are vital to the
world we live in. But today’s emphasis on those four disciplines presumes
knowledge about the future that is impossible to know. New industries will
start up in the next fifteen to twenty years. Students who have specialized in
STEM subjects may have an advantage today, but who among us knows what jobs
will be in demand ten or twenty years from now? Some businesses will produce products
and provide services we cannot envision today. Twenty-five years ago, did most
educators anticipate the revolution in marketing that was a consequence of the
internet? Was it more important that Jeff Bezos understood differential
calculus, or was his success a product of being able to conceive of and
conceptualize a form of selling to consumers that had never before existed?

The
purpose of education, beginning with the basics of reading, writing and
arithmetic (what my parent’s generation knew as the three ‘R’s), is to
stimulate the mind – to encourage the quest for knowledge, to learn to
challenge and question, to appreciate the joy of learning. A liberal arts
college is not a trade school. It is an incubator for ideas. College should
provide a forum that allows students to ingest and process myriad ideas. There
are guidelines for graduating seniors, but there are no roadmaps, as each life
lived is different and job opportunities tomorrow may be in areas we cannot
conceive of today. A good education should help young people learn to maximize
their strengths and to understand and compensate for their weaknesses. It
should help enable them to adapt to a changing environment. Accurate statistics
are hard to come by, but data from the Census Bureau and the Bureau of Labor
Statistics suggest that the average person will have about ten jobs during
their working life.

The
focus on STEM courses has come to the fore because of the political concern
over rising income inequalities and because we know that jobs have gone begging
for lack of qualified applicants. The emphasis is understandable. But, besides
presuming to know an unknowable future, it presupposes an equality in students
that does not exist. Ability, aspiration and dedication are qualities that differ
among all of us. While the work done by Nobel Prize winner Roger Sperry in the
late 1970s on Left Brain-Right Brain theory has been largely dismissed, there
is no question that people vary in their abilities in regard to logic, numbers
and rational reasoning. Schools and colleges (and students, of course) need to
focus on each individual’s talents. The opportunity to study STEM courses
should be available to all, but so should the opportunity to study English and
Philosophy.

While
I don’t believe a college education is necessary for all, research suggests
that it can increase social mobility. A recent study from the Federal Reserve
Bank of San Francisco
showed that children who are born into the poorest fifth of income distribution
are six times as likely to reach the top fifth if they graduate from college. I
also believe that learning and knowledge leads to greater happiness, an often
overlooked but important advantage of education.

However,
the assumption that universal college education will magically reverse income
distribution is a myth told by politicians who live in a world of sound bites.
There is a pyramid shape to all of our lives. Every business has one chief
executive. Our country has one President and each state has one Governor. There
is a hierarchy in our schools and colleges, just as there is in the military.
It is true in all human endeavors, just as it is in the animal kingdom. Who has
not heard of alpha dogs or queen bees? Who has not witnessed the lead duck in a
V-formation as they migrate south or north? There will always be a few leaders
and many followers.

We
hear calls for more equality in terms of outcomes. But that is a siren call of
populism, rather than a realistic policy recommendation. Are income and wealth
spreads too big? Who’s to say? The gaps may be wider than forty years ago, but
history shows the spreads are nowhere near as wide as they were 100, 300 or 500
years ago. History also shows the gap is far wider in Communist and
totalitarian regimes than in democracies. We cannot all be rich, and we will
not all be poor. I never ran a company, but, as grandparents, my wife and I now
sit atop the apex of our family pyramid – a position we achieved, not because
of “fairness,” but because of mutual love and longevity. And, yes, it was
something to which we aspired.

The
more important area of focus should be ensuring that colleges remain
classically liberal. Ironically, the biggest threat comes from those
institutions that consider themselves most liberal, an example being the University of California. According to Heather
MacDonald, in the magazine City, the
regents of the UC are devising “principles against intolerance,” to protect the
University’s core principles of “respect, inclusion and academic freedom.”
Those principles would seem to be ones with which all reasonable people would
agree. But, as Ms. MacDonald wrote, “Any university run as a meritocracy will
be naturally inclusive of anyone who brings intellectual talent and rigor to
the institution.” “Respect,” as she noted, “is ordinarily earned by
intellectually solid research.” Any university that bars from speaking those of
differing ideas is, definitionally, intolerant. In fact, what the University is
doing is erecting roadblocks that would inhibit speech and behavior when they
are deemed antithetical to the beliefs of the institutions’ administrators and
professors. For example, using the term “America is a land of opportunity”
is considered a racial microaggression, as it is seen as an attack on certain
“victim” groups.

“Trigger
warnings” have become a favorite of the Left. In last Sunday’s New York
Times, Kate Manne, an assistant professor at Cornell wrote an op-ed, “Why I
Use Trigger Warnings.” She wrote: “The idea [for trigger warnings] was to flag
content that depicted or discussed common causes of trauma, like military
combat, child abuse, incest or sexual violence. People, then could choose
whether or not to engage with this material.” The problem is that in living our
lives we do not always have that choice. We must be able to confront the
unpleasant as well as the pleasant. The horrors of the Holocaust leap from the
pages of Babi Yar.
It may offend, but in its words are universal lessons. Huckleberry Finn may have language that some find offensive, but in
ignoring it students are deprived of a moral story told with action and humor –
a slice of life in mid 19th Century America. Are we better off to be
comforted, but ignorant?

The
first priority of education should be to ensure graduates have the ability to
think independently and to reason out problems. History and literature are the
best manuals in understanding human behavior. Education should prepare youth
for a future unknown.

Monday, September 21, 2015

“Permit
me to issue a nation’s money and I care not who writes the laws,” so, allegedly,
once said Mayer Amschel Rothschild (1744-1812). Last week, Fed Chairwoman Janet
Yellen took advantage of falling commodity prices, turmoil in markets, an
anemic recovery in the U.S.
and weakening economies overseas – especially China – to leave the rate on Fed
Funds at the zero to twenty-five basis points where it has been since December
17, 2008. She also cited a lack of inflation and concern that a stronger dollar
would further inhibit economic recovery at home.

What
she did not mention was the effect of higher interest rates on debt owed by the
federal government and, thus, its fattening impact on the deficit. Federal debt
is about $18.2 trillion. That number excludes debt owed by state and local
governments, as well as funds owed by agencies. And, of course, it does not
include future obligations of social welfare programs like Social Security,
Medicare and Medicaid. Deficits in fiscal 2015 will add about $400 billion to existing
debt. A one percent increase in interest rates would up the deficit by about 40
percent. Should rates revert to normal levels, the deficit would rise to a
trillion dollars. Ms. Yellen is surely mindful of the salutary effect low
interest rates have had on annual federal deficits.

Connecticut, where I live and which is one of the most profligate
of the fifty states, announced last week that $103 million would have to be cut
from next year’s budget. The headline in my local paper: “Malloy Plans Steep
Cuts.” Those affected cried foul, even though the cuts amount to one half of
one percent of the $20 billion state budget. It would be as though the average Connecticut family, with
a house-hold income of $60,000, were told to pare expenses by $300. The
explanation for the cuts could have come from the theater of the absurd. Mr.
Malloy claimed that stock market losses will cut into anticipated corporate and
state income taxes received. (The State had budgeted for a 7.1% increase in
income taxes, an unrealistic expectation given that individuals and businesses are
deserting the state. His budget still assumes a 4.4% increase in those taxes,
which will prove too ambitious.) Low interest rates, without the ability to
print money, are not a panacea to the financially promiscuous. They mask the
problem.

A
little bit of inflation the Fed finds desirable. Am I too much of a cynic if I
suggest it is because it allows them to pay back today’s loans with tomorrow’s less-worthy
dollars? Since the Great Depression, politicians have warned of the devastating
effects of deflation – an excuse the Fed uses to justify keeping rates low.
Deflation, we have been conditioned to believe, leads to Hoovervilles, men
selling apples and brokers taking swan dives out of windows on the corner of
Broad and Wall. Deflation is bad
when incomes fall faster than prices of goods and services. Yet, as James Grant
reminded us in his most recent Interest
Rate Observer that is not always the case: “In England, between 1800 and 1913,
real GDP more than quintupled even as consumer prices dwindled; the basket of merchandise
that cost £2.25 in 1800 cost £1.60 in 1913. Keep in mind, that period included
the Napoleonic Wars, a time that saw British debt soar to 250% of GDP.” More
pertinently, those years included the Industrial Revolution, which brought
disruptive change to millions, costing jobs and driving families off farms and
into cities. Yet, employment grew, as did standards of living. Today,
technology is changing our lives in similar ways, eliminating jobs in many
industries and putting downward pressure on the pricing of goods and services.
What we cansee are the jobs being eliminated due to technology. What we cannotsee are the jobs that will be created because of technology. Examples
are Amazon and Uber, each going after politically entrenched businesses, while
providing goods and services that benefit consumers. Consider, as well, the opportunities
Charter schools provide inner-city children, despite objections from teachers’
unions and push-back from their political gophers.

We
cannot plan for every contingency, whether good or bad. Government’s response
should be to give people more freedom to innovate and experiment, to succeed or
to fail. People need confidence, not about the future which is always unknown,
but in the belief that their freedom will not be taken away, and that regulation
and taxes will not provide too steep a hurdle. The price of money is important,
as is knowing that inflation will not diminish its value. At this point in the
cycle, it is fiscal reform not monetary ease that is wanted.

The
Federal Reserve is supposed to be independent from political interference. It
is comprised of twelve Reserve Banks, with a headquarters in Washington. The twelve Reserve Banks elect
or appoint their presidents. There are seven members of the Board of Governors
who are appointed by the President and confirmed by the Senate. They serve
14-year terms. The President designates and the Senate confirms two members of
the Board to be Chairman and Vice Chairman, for four-year terms. The primary
responsibility of the Board is the formulation of monetary policy, which is
done through a twelve-member Federal Open Market Committee (FOMC). The FOMC
consists of the seven board members and five presidents of the twelve Reserve
Banks, the latter on a one-year rotating basis. The board sets reserve
requirements and shares responsibility with the Reserve Banks for discount rate
policy. Those two functions plus open market operations

constitute
the monetary tools of the Federal Reserve System.

The
Fed was critical in 2008, when the credit crisis threatened to undue our
financial system. The first quantitative easing program was announced in
November 2008; a month later the Fed reduced rates to zero. Then, less than
four months after President Obama signed the American Recovery and Reinvestment
Act of 2009, the economy came out of recession. What allowed the economy to
recover was a combination of Fed actions, coupled with the confidence people
felt with Mr. Obama in the White House. The recovery that emerged arrived
before the economy could feel the effects of the so-called stimulus plan. In
contradiction to the myth that has been told, Mr. Obama inherited an improving
economic and financial situation. The mess in which we now find ourselves is of
his making, not his predecessors.

Low
rates have allowed the federal government to increase its borrowings without
the inhibiting effect of normalized interest rates. Since federal government spending
accounts for about 23% of GDP, and with state and local spending bringing the
total to about 35% of GDP, the question arises: is government too big to tame?
We better hope not.

Mr.
Obama has put us on the well-trodden path toward democratic socialism and the
limit that route brings to economic freedom. We need to get back to the one from
which Western democracies have strayed – the path that leads to greater
opportunity and reward for individual initiative. One step would be to release
the Fed from the bonds of politics.

Thursday, September 17, 2015

Congress,
composed of popularly elected representatives, is charged with passing laws. It
is the job of the President to “faithfully” carry out those laws, whether he
(she) likes them or not. It is the Supreme Court alone, based on cases brought
before it and using judgment and precedence, which decides whether a law meets
the standards set forth in the Constitution. No one, not the former Secretary
of State, not even the President is above the law. Justice is (or should be)
blind.

When
Kim Davis, the RowanCounty (Kentucky)
clerk refused to issue a marriage license to a gay couple because it violated
her religious beliefs, she broke the law. She spent five days in jail. While the
right to worship as we please comes from our Creator, we live among others who
may not share our beliefs. Society functions when it adheres to laws, not
passed down from God, but made by men and women. When Michael Brown walked into
a convenience store in Ferguson,
Missouri and stole some
cigarillos, he broke the law. When he resisted arrest, he broke the law. When
he attacked the arresting police officer, he was shot. Despite enormous
pressure from the White House, a grand jury decided not to indict and the
Justice Department declined to bring criminal charges against Officer Wilson. Justice
prevailed, but because of attempts by public officials to evade the legal
system Wilson’s
life was forever changed.

This
is not to suggest that all laws are good. Some are not. And people can and do effect
change. Peaceful protests and civil disobedience are embedded in our culture. In
1849, Henry David Thoreau published, “Civil Disobedience.” Decades later Martin
Luther King defined it as the active, public breaking of the law to bring about
a change in law or public policy. Both men broke laws they felt unfair or
wrong. Both served some time in jail. Neither whined about their treatment, and
both used peaceful means. Abolition began as a protest movement. It culminated
in the Civil War and achieved its end on January 1, 1863 when Lincoln issued the Proclamation Emancipation.
The women’s suffrage movement began in the middle of the 19th
Century and was finally realized with the passage of the 19th
Amendment on May 19, 1919. The Civil Rights Act, the consequence of decades of
protests, ended legal segregation with its passage in 1964.

While
the examples cited above show that bad laws can be amended, it should be kept
in mind that while there have been 11,539 proposed amendments to the
Constitution only 27 have been enacted. It is a laborious process, requiring a
two-thirds majority in Congress and approval by the legislatures of
three-fourths of the States. It was not designed to be easy.

The
foundation of our Country rests on laws and rules of behavior. The system is
designed to maintain order and protect us from tyrannical leaders – a quaint
notion in today’s world where many students don’t learn American history – but
one that greatly concerned those who gathered in Philadelphia in 1787. Without laws we would first
descend into chaos and then fall victim to a leader who amassed too much power.

Yet,
there are indications that lawlessness has increased. As President, Mr. Obama
sets the tone. In July 2009 Harvard Professor Henry Lewis Gates was accosted by
Cambridge police
who had been alerted there were two African-American males breaking into homes.
Preemptively, Mr. Obama said the police “acted stupidly.” He later had to
apologize and sat down for a beer with Officer James Crowley and Professor
Gates. Two and half years later, an African-American teenager, Trayvon Martin,
was shot by George Zimmerman who was performing “neighborhood watch.” Again,
before the facts were in, Mr. Obama claimed racism: “If I had a son, he would
look like Trayvon.” A jury found Mr.
Zimmerman innocent and the Justice Department found no case of civil rights
violation. The situations in Ferguson, Missouri and Baltimore,
Maryland brought similar
responses – prejudging both cases before facts were available. The man
responsible for faithfully executing the laws should not be seen as prejudging
the accused. Even when the accused are found innocent, their reputations have often
been destroyed.

In
Baltimore where
it appears that the police did use excessive force, Mayor Stephanie
Rawlings-Blake made a bad situation worse. In the rioting that followed the
death of Freddie Gray, she ordered the police to “give those who want to
destroy space to do so.” It seemed irrelevant to her that what would be
destroyed was the rightful property of another. It is when politicians ignore
the constraints of law and when they surrender to mobs that lawlessness and
anarchy flow.

It
is our leaders’ disregard for laws that lie behind this concern of our nation
falling into lawlessness. The law creating the Affordable Care Act required
states to set up exchanges. When some refused, the Administration, not
Congress, rewrote the law to suit their purposes. When Mr. Obama wanted to make
recess appointments, he simply declared Congress not in session. The Supreme Court later ruled 9-0 that he was
wrong. In sanctuary cities, local governments refuse to uphold the law. They do
not permit municipal funds to provide resources or comply with the enforcement
of federal immigration laws. They claim to be acting humanely, but the real
motivation is political. The Lois Lerner case exposed a lawless plan to give
extra scrutiny to those groups opposed to Mr. Obama’s 2012 reelection bid.
Hillary Clinton is lawlessness personified. She lied about her use of a private
e-mail account and the server on which it was based. She lied about what
happened in Benghazi,
and she wants us to trust her to be President?

America is a remarkable achievement. There are many reasons
for its success: its isolation, which meant the Country was unlikely to be
invaded. Its size and abundant natural resources meant it could expand and
become wealthy. But the real reasons were the men and women who came to these
shores from myriad places and cultures. They were a people willing to leave
behind cities, friends and families to find a new life free of persecution. Those
who became leaders were usually classically schooled, coupled with common
sense. They understood history and governments. They understood what worked.
They knew that a healthy and cohesive society had to be based on laws; else anarchy
would prevail and, from the ashes, bad men would rise.

We
should keep in mind the larger picture, as we ponder the mistrust of police. No
one will claim there are not rogue cops. The undercover policeman who took down
James Blake outside a New York
hotel comes to mind. But they are the exception. The profession is dangerous. In
2014, 126 police officers were killed. It is true that Blacks are
disproportionately victims of crime, but those crimes are committed
overwhelmingly by other Blacks. The cops are in minority communities because
they and the people know that lawlessness undoes civilization.

Monday, September 14, 2015

“You’re
damned if you do and damned if you don’t.” That must sum up the way Jeb Bush felt
after releasing his detailed tax plan. Serious voters want specifics of
candidate’s proposals. An obsequious Press is less interested in disseminating
news than in taking sides – flattering their favorites and condemning their
opponents. An example was a headline in last week’s New York Times, a
paper that thinks of itself as the nation’s newspaper: “Jeb Bush’s Plan is a
Large Tax Cut for the Wealthiest.” The headline was misleading. The largest
percent decrease in taxes would accrue to the median taxpayer; the lowest to
those in the highest bracket.

It
is not my purpose to defend Mr. Bush’s proposal, or to argue that it is the
best alternative. It is to point out that it is a serious proposal and more
important than listening to the antics of Mr. Trump and Ms. Clinton. The plan reduces
the number of brackets and limits deductions; it addresses behavior the current
system encourages. It is detailed. Other candidates should follow suit. Keep in
mind, taxes affect behavior. Yet most analysts, when measuring the impact of a
tax change, wrongly use static (as opposed to dynamic) accounting to calculate
the effect

In
respect to the current tax system, it is not that the wealthy do not pay their
“fair” share; it is that the system is too cumbersome. It favors those who
thrive on complexity and it encourages non-economic behavior. In terms of
“fairness,” according to a Pew Research study using 2014 data from the IRS, the
top 2.4% of all income tax filers (those earning above $250,000) paid 48.9% of
all federal income taxes, while the bottom 45.9% of tax filers (those earning
less than $30,000) paid 1.7 percent. Special exceptions, allowances and
exemptions for favored individuals and businesses abet the cronyism that is
rampant in Washington.
A 70,000-page tax code guarantees full employment to tax lawyers and
accountants. The code is loved by those who benefit from its complexity, but it
is a nightmare to the majority of Americans who must navigate its illegible
tables and indecipherable language.

In
terms of Mr. Bush’s plan, on the corporate side, it would reduce the stated
corporate tax from 35% to 20%. (Keep in mind, the effective tax rate on profitable U.S. corporations, according to
Americans for Tax Fairness, was 12.6% in 2010.) Complexities serve the wants of
large businesses and wealthy individuals. Simplicity is the enemy of tax
attorneys. Bush’s plan would eliminate interest payments as an expensed item,
which favors debt versus equity financing. It would allow for the expensing of
capital investing, which should encourage economic growth. S-Corporations, LLCs
and partnerships would continue to pay taxes under the personal tax code.
However, the pass-through rate would drop from 39.6% to 28%. The corporate AMT
(Alternate Minimum Tax), which requires calculating tax liability under two
sets of rules, would be eliminated. The plan would impose a one-time tax of
8.75%, payable over ten years, on the $2.1 trillion stashed overseas, which
would allow those funds to be brought back to be invested in U.S. projects.
And, to discourage “corporate inversions,” the plan would no longer tax
corporations’ international profits, placing U.S. businesses on a footing equal to
their international competitors.

As
mentioned complexity favor large companies. Small businesses, historically the
life-blood of job growth in the U.S.,
do not have the same ability to reduce taxes as do large ones. Additionally,
many pay a higher nominal rate, as they file under the individual code.
According to the Citizens for Tax Justice, fifteen Fortune 500 companies paid
no tax in 2014, despite generating $23 billion in profits. While I cannot vouch
for those numbers, thousands of lawyers and accountants work to ensure the
limiting of tax obligations. The current system has not worked. Data from the
Bureau of Economic Analysis (BEA) suggests that in 2014 corporate taxes
(excluding payroll taxes) accounted for 10.6% of federal tax revenues. In the
1950s that number ranged between a quarter and a third of all federal tax revenues.
A report from the Bureau of Economic Analysis (BEA) shows that
inflation-adjusted GDP, since 1980, has risen 149%, while inflation-adjusted
corporate tax receipts were higher by 84.5%.

On
the individual side, Mr. Bush’s plan would take the seven tax brackets and
reduce them to three – 10%, 25% and 28%. Married couples with two children,
with incomes below $38,600, would pay no tax. The plan proposes some radical
changes. State and local taxes would no longer be deductible. The deductibility
of state and local taxes means that low-or-no-income tax states like Texas, New Hampshire and
Florida subsidize high-income-taxed states like
New York, California,
Connecticut and New Jersey. Why should they? Mr. Bush would
eliminate the favorable treatment of “carried interest,” a benefit to a small
number of highly compensated private equity and hedge fund managers. The
personal exemption phase-out (PEP) would be eliminated and the standard
deduction would be raised, in the case of married filers, to $22,600 from
$12,600. Pease, or the limit on itemized deductions for high-income tax payers,
would also be eliminated. It would be replaced with a limit on the value of all
itemized deductions, with the exception of charitable gifts, to 2% of adjusted
gross income. The AMT, a bane to taxpayers and a boon to tax preparers, would
be eliminated.

The
Bush plan is a step toward addressing a corrupt agency, as well as resolving an
unnecessarily complex system. It would boost economic growth. Not everything in
the plan is to my liking. I would prefer a simpler system – a flat tax, with no
deductions, including charitable gifts. The American people are generous and I
suspect most charitable groups would survive. On the other hand, as has been
revealed by the exposure of “charitable” organizations like the Clinton
Foundation and Super PACs, some are fronts to maintain a lifestyle or to
promote self-serving and/or political causes. The inheritance tax would
disappear. The Bush proposal would reduce rates on investment income. In my
opinion, since capital investments were taxed when they were income, it is
wrong to tax their fruits. Mr. Bush would eliminate the requirement of seniors
paying their share of the payroll tax. I would not. Social Security is
bankrupt, or close to it. I would prefer to see the payroll tax extended –
albeit at a lower rate – on all income.

Government
spending represents about 22% of GDP. Financing that spending is the obligation
of the American taxpayer. The collection agency is the IRS. As we learned in
the Lois Lerner saga, the Agency has become corrupted for political purposes. Learning
the specifics as to how each candidate plans to finance his or her government
should be a primary focus of the campaigns. Mr. Bush has made a start; it is a
plan worth debating. The others should follow.

Thursday, September 10, 2015

That
there is a humanitarian crisis of epic proportions in refugees fleeing Syria,
Iraq, Afghanistan and numerous African nations for Europe cannot be denied.
That the causes of these flights are an insurgent, ISIS-run Islamic Caliphate
that now controls territory In Syria and Iraq larger than Great Britain, ruthless
dictators like Bashar al Assad in Syria and Omar Hassan al-Bashir in Sudan, and
Islamic terrorism throughout the region is also undeniable. And we know that Islamic
terrorist organizations will not let this crisis go to waste. They will insert
terrorists and martyrs among the fleeing refugees, thereby increasing risks to
the West.

The
UNHCR (United Nations High Commissioner for Refugees) have said there were 14.4
million refugees worldwide at the end of 2014, a 25% increase from 2013. Almost
all have come from the Middle East and Africa,
chased out by fear, famine and pestilence. Additionally, the number of
internally displaced persons is put at 38.2 million. The situation has worsened
in 2015.

The
photograph of the body of three-year-old Aylan Kurdi washed up on a Turkish
beach near the town of Bodrum
this past week tore at the heart strings of those in the West. It brought a personal
element to one of the greatest human tragedies in recent times. This boy, with
his Velcro sneakers and red shirt, could have been our son or grandson. In fact
he was Syrian, trying to reach Europe when the
boat he was on capsized, drowning him, his five-year-old brother and his
mother. His father, Abdullah, alone of the family survived. But will that
knowledge effect they way we treat the causes of this migration from Hell? Will
we finally admit that those being tortured, killed and chased from their homes
are not a consequence of “violent extremism,” but are victims of Islamic
terrorism? Will we reconsider the role we have played in abetting this horror?

In
the past five years, four million Syrians have fled Bashar al Assad’s regime.
Another seven million are living in the country, but displaced from their
homes. Two hundred and ten thousand have been killed in the five years since
the “Arab Spring.” This is the country where President Obama drew a “red line”
in the sand two years ago, and then walked away when it was crossed. Will
Aylan’s death change the way we perceive our responsibilities to the world and
will it alter the hypocrisy of the West’s tolerance of the intolerant?

The
truth is that we bear much of the blame for the unwinding we are seeing in the Middle East. We abdicated our responsibility. After
invading Iraq in 2003 – an action supported by both Houses of Congress and the
UN, but one that can be debated today – we ignominiously left prematurely in
2011, letting the country fall into anarchy. We supported the Arab Spring in Egypt,
which caused President Hosni Mubarak to resign. Now, four years later tens of thousands
of Egyptians are dead. A February interview by NPR suggested that President
Abdel Fattah el-Sisi is worse than Mubarak. While “leading from behind” and
without Congressional or UN support, we deposed Libya’s leader, Muammar Gadaffi,
with no plans for a replacement. We refused to uphold a “red line” we had drawn
in Syria.
The Taliban has not gone quietly into the night, as forecast. The Council on
Foreign Relations recently noted: “The Taliban has outlasted the world’s most
potent military forces and its two main forces now challenge governments in Afghanistan and Pakistan.” And, in appeasing
Muslims, we have left Israel
isolated.

Why
has the West allowed this to happen? There is a belief among the West’s elites
that we are not our “brother’s keepers.” There is a perception that we must
exorcise the sin of colonialism. The map of the Middle East was drawn by
Western nations in the aftermath of World War I and the collapse of the Ottoman Empire. It was done with no regard to the tribes who
had lived there for millenniums and without concern (or even knowledge) about
the differences between Shiites and Sunnis. There is no question of the West’s
culpability. But, we cannot sit back and atone for all the wrongs done. We
cannot let the process unfold in a way that thousands more will die and
millions more will be displaced. We must try to protect the innocent by
adhering to universal moral laws that says it is wrong to torture, kill, rape
and plunder. If we simply walk away, saying it is not our affair, the crisis
will worsen. More blood will be spilt and Europe,
already swamped assimilating existing Muslims, will become more troubled.

Like
Parkinson’s Law, the void we leave when we abdicate responsibility gets filled.
The Russians will increase their presence, or the Chinese will jump in. Will
the Middle East be a safer place with Vladimir
Putin swinging the night stick? Will peace-loving Muslims, Israelis and what
few Christians are left in the region be better served with a beat walked by Xi
Jinping? The United States abrogated its
responsibilities as the world’s policeman. And, sadly, it has led to the exodus
of millions of refugees.

“Western
elites,” as Victor Davis Hanson wrote recently, “deny their own
exceptionalism.” Our exceptionalism is not a function of race or religion, or
brains and brawn; it is a consequence of ideas. It is the belief in consensual
government, the rule of law, equality, religious freedom, free markets,
individual liberty and success based on merit. These are beliefs unique to the
West. But they incorporate rights that are God given and are therefore
universal. Defending them is an obligation of those who have them. If we don’t,
we risk losing what freedoms we have.

With
all of our failings, there has never been a country like the United States.
We are not without faults. We read about them every day. But we are the only
nation that has both the goodness of heart, the financial resources, the force
of character and the military strength to maintain world peace. We cannot do it
alone, but we must assume leadership. We must publically talk of values that
are universal, that are not exclusive to any specific religion or race. Our
error has been that, in our desire to be seen as fair in the interest of being
pluralistic, we accepted moral relativism – a belief that there are no absolute
values. That is short-sighted and wrong.

To
solve the refugee crisis that is flooding Europe means we must increase the
number of vetted refugees we will accept, but we must also strike at its root causes
– the principal one being ISIS and Islamic terrorism. We cannot wish it away.
It will not disappear on its own. It is late and the monster has strengthened;
we must confront it in its lair. The peace of the world depends on it.

Tuesday, September 8, 2015

On
December 17, 2008, in response to the financial crisis, the FOMC (Federal Open
Market Committee) lowered the Fed Funds rate to essentially zero. (The rate,
which had been coming down for more than a year, had been 2% in September.) When
Fed Funds were set at zero the financial crisis, which had reached its
perihelion in late September-early October, was already on the mend. The
recession, which had begun in December 2007, was two-thirds past. Nevertheless,
Fed Funds have been kept at this unprecedentedly low level for almost seven
years. The Federal Reserve has become entrapped in its own snare, with no clear
exit.

On
September 16-17 the FOMC will meet. It had been expected that, finally, the
process toward normalization would begin. (Historically, Fed Funds generally
ranged between two and five percent.) Expectations had been that the rate would
be raised by 25 basis points. But, with China’s economy and markets in
free-fall, with our economy chugging along in second gear, with inflation seemingly
tamed, and turmoil in equity and commodity markets over the past several weeks,
there are doubts as to whether they will act. Eminent economists, like Larry Summers,
have warned (incredulously) against the Fed being too hasty, citing the fragility of the recovery, as well as risks
to speculative markets.

While
August unemployment dipped to 5.1%, the lowest since April 2008, labor
participation remains stuck at 62.6%, the lowest since October 1977. Most of
the jobs added, as has been true for the past six years, were part-time. The
unemployment number of 5.1% is based on the 157,065,000 people in the workforce
– those working or actively looking for work. It does not include the
94,031,000 (the rest of the population above the age of 16) that are not
counted as being in the labor force. Annual U.S. GDP growth, since the recovery
began in June 2009, has averaged about 2%, the lowest of any recovery since the
end of World War II. If the Federal Reserve wants an excuse from walking away
from a rate increase, there is ammunition.

Cheap
borrowing costs did attract more spending, but most all has come from the
public sector. Both household and financial sectors deleveraged… or, at least, increased
debt at slower paces. According to a study conducted by McKinsey Global
Institute, global debt since 2007 has risen by $57 trillion (or almost 40%) to
about $200 trillion. The main culprit has been an increase in public sector
borrowings. Globally, government debt has risen at a compounded annual rate of
9.3%, while consumer debt has compounded at 2.8%. In the U.S., household
debt is below where it was in mid 2008, while federal debt has doubled. That
borrowing has done little to lift economic activity. In 2008, the year of the
crisis and amidst a recession, the ratio of U.S. federal debt to GDP reached 70
percent. Today, with the Country in neither a financial crisis nor a recession,
it is 100%.

Low
interest rates have primarily benefited the federal government: they served to
mask the actual size of the deficit. That increased deficit owes its existence
to poor policy decisions by the Obama Administration, along with the failure by
Congress and the President to implement meaningful regulatory and tax reform.
In fact, both have worsened. Taxes have increased and regulations have
stiffened. The crisis was cynically seen as an opportunity. In a February 9,
2009 interview with the Wall Street Journal, then White House Chief of
Staff Rahm Emanuel opined: “You never let a serious crisis go to waste. And
what I mean by that it’s an opportunity to do things you could not do before.”
In other words, we were warned it was in the interest of the White House not to
have the crisis resolved too quickly. And it has not been.

Instead
of heeding the recommendations of the Simpson-Bowles Commission, a Commission
set up by the President, an agenda was pursued that included a stimulus plan
that Mr. Obama was forced to admit a year later “did not stimulate.” He
unilaterally pushed through two significant programs designed to embed more
deeply the role of government in our daily lives – ObamaCare and Dodd Frank.
The consequence is that Mr. Obama has reigned over the slowest economic
recovery in the post-War period. Additionally, wages have been stagnant, poverty
has increased and income and wealth gaps have widened.

Over
the years the Federal Reserve has played a critical role. In 1980, in raising
rates rapidly, Chairman Paul Volcker induced a sharp recession, but he killed
the dragon that was inflation. In 2008, working with the U.S. Treasury, the Fed
played a vital role in avoiding a global, systemic financial meltdown. Left
alone, it could have caused an economic Armageddon. The fact that that did not
happen is testament to those in charge at the time – Timothy Geithner,
President of the New York Federal Reserve; Ben Bernanke, Chairman of the
Federal Reserve; Henry Paulson, Secretary of the Treasury, and President George
W. Bush. While those four also bear some responsibility for the causes of the
crisis, they were the ones who addressed it at the time.

Those
were a dicey few weeks – the scariest of my more than four decades on Wall
Street. However, as December arrived, so did a sense of relief. While stocks
were still declining and the economy was still in recession, market observers
noted that the TED spread (a measurement of perceived risk, determined by the
difference between one-month LIBOR and one-month US Treasury’s) had declined
from around 465 basis points in October to 131 basis points at the end of the
year. Additionally, high-yield bonds had begun rallying in late November 2008.
The worst of the crisis, in short, was over, but monetary policy has persisted
as though it were not. Keep in mind as well, the BLS (Bureau of Labor
Statistics) declared the recession over in June 2009.

The
Obama Administration and the Fed (as well as Central Banks around the world) have
created a Catch-22 – a conundrum with no easy answers. It will only be solved
by a Fed Chairman – one with the intelligence, courage and the persuasive
powers of a Paul Volcker. She (or he) will need the support of the President
and Congress. The Catch-22 is a damned-if-you-do, damned-if-you-don’t
situation. But we cannot go on as we have. Cheap money devalues currencies. It
can destroy a nation. It can lead to another Armageddon. Central banks cannot
be the only game in town. Legislatures and Executives must pick up the reins. The
answers lie in normalized interest rates, tax reform that simplifies, lowers
rates and addresses the need for individuals to save and invest for retirement,
along with understandable and sensible regulation – lessening the grip of
government, while giving more freedom to individuals and the private sector.

Thursday, September 3, 2015

“Meanness”
is defined as unkindness, spitefulness and unfairness. It can also suggest
stinginess, as in depriving students of contrary opinions and of ignoring their
need to be challenged and to think independently. The word describes today’s political
and cultural environment, one characterized by divisiveness between the elite
who govern and the masses that are governed. When George Bush exclaimed “you’re
either with us or you’re against us,” he was referring to those who were
committing acts of terror or who were harboring terrorists. Now it means Republicans,
or at least it does to Barack Obama and Hillary Clinton.

Unlike
most countries, the United
States is a nation of immigrants – we come
from all places, races and religions. The heritage we share is the history of
our founding, which was based on the concept that “all men are created equal
and that they are endowed by their Creator with certain inalienable rights…that
governments are instituted among men deriving their just powers by the consent
of the governed.” It is a heritage of ideas. Whether our ancestors were present
in Philadelphia,
or whether we arrived in the past decade, it is the knowledge that our basic
rights do not come from government, but from a larger power, and that
government is subservient to the people. It is that that distinguishes
Americans. No matter our political differences, no matter whether we are
conservative or liberal, Democrat or Republican we share this history. We have
an obligation to encourage its persistence. But today that sense of commonality
seems at risk.

People
in all societies need a bonding agent – something that provides unity. Some, as
the Nazis did, do it through militarism and nationalism. Others, like
Communists, do it by forcing cohesion. Still others, like Islamists, use
religion. The people of the United
States, a polyglot nation of citizens who
have come here of their own volition or who are descended from those who did,
created that bond by emphasizing the exceptional aspects of our country: its government,
its history and its people.

Now,
we are told by President Obama that we are not “exceptional,” at least no more
than are the Greeks or the British. The word exceptional does not mean we
consider ourselves superior to Brits or Greeks, but that our history and people
are singular. We are not all religious and those that are worship different
Gods, but inherent in what makes America America is a belief in a power greater
than man. Otherwise, by default, we would have to assume that our rights have
been conferred by man. So, when we are told we are not “exceptional,” the ties
that bind loosen. Not only have those been loosened, but with his memorandums,
directives and executive orders Mr. Obama has rent us asunder. And he has
offered no substitute to keep us together.

We
read a great deal of the polarization that infects our nation, but when we read
our history we find that men and women have always expressed ideas forcibly.
There is nothing new in polarization. The greatest example was the Civil War. But
today, unlike previous eras, the divide is between governors and governed.

Certainly,
we face serious fiscal and political issues, but the real problems are
cultural. Government has abetted these concerns, rather than dissuading them.
From our beginnings, there have been those who fawned over government officials
that controlled purse strings. Cronyism may be worse today, but it is as old as
the Republic. Other issues are more recent and we see their consequences manifested
in the attraction of fringe candidates: It is the culture of “identity
politics,” where people are taught to become victims and where they learn that
dependency is more attractive than responsibility. It is the hubristic elitism
that has infected the DNA of Washington politicians, mainstream media and
academia. It is manifested in teacher’s unions and the politicians they
support, who care more for school teachers and administrators than for the
children they teach. It is the coddling of college students that presumes a
fragility of their psyche, and that ill-prepares them for the future. It is the
social degradations that encourage childbirth without marriage. It is a welfare
system that discourages work. It is the abandonment of religion – an unspoken arrogance
that implies we have advanced to a point where we no longer have need of a
greater power. It is the unambiguous assumption that man can control nature. It
is the government official who caves to popular whims, rather than adhering to
the rule of law. And, perhaps saddest of all, the fact that birthrates have
fallen close to or below the replacement rate suggests defeatism and pessimism
regarding the future.

Good
men and women serve government because they believe in the ideal of service, of
giving back to a system that helped them succeed. Bad men and women serve
government because they seek personal power. Deciphering the difference is
critical for the future of any free nation. The ability to do so requires an
educated citizenry. It is why public education was so important to the founding
fathers – a movement then led by my four-great grandfather, Noah Webster. A
government of, by and for the people demands an electorate well-versed in current
events and with knowledge of history. It requires an understanding of human
behavior that can best be acquired through studying the Old and New Testaments
and reading classical thinkers like Adam Smith and John Locke. It has become
common to emphasize the importance of STEM (science, technology, engineering
and math) subjects – and there is no question as to their importance – but it
has also become popular to ridicule liberal arts. For the young, it is not just
learning how things work, but it is seeing the way men and women – across all
cultures – behave when confronted with malice, hatred, greed, obsession,
jealousy and a host of other emotions – good and bad. Those traits can be best
learned when we read authors like Shakespeare, Dickens, Tolstoi and Austen. Their
novels also help us anticipate change that is inevitable. Understanding the
evil men can do helps prevent the rise of a Mao, Stalin or Hitler.

Has
the dumbing-down of American public schools been a function of neglect, a focus
on unions and benefits, or a deliberate policy decision – to keep the people
stupid? Millennials are supposed to be the best educated in American history.
That claim may be true in terms of years spent in classrooms, but it doesn’t
appear true in terms of their understanding of our history, or the way in which
our government functions, or in their lack of familiarity with great literature.

The
consequence of supercilious elites in Washington
and the two coasts – a group comprised of politicians, big business, big banks,
big unions, the Press and Hollywood
– has been a culture of meanness, in both definitions of the word. Our society
has become less fair and more spiteful. It encourages exclusivity; it fosters
conformity; it denigrates those who disagree and it risks giving rise to a
generation incapable of making choices based on a clear understanding of their
country.

Financial
markets dominated the month. Puerto Rico defaulted on a bond payment, marking
the first time a U.S.
commonwealth had done so. In seven business days the Shanghai Index lost 27% of
its value, or about $1.5 trillion. In six days, U.S. stocks fell 11%, costing
investors around $2.8 trillion. Markets in other parts of the world shared
similar fates. The VIX, a measurement of volatility that had spent much of the
year in the mid to high teens, spiked to 40.74 on the 24th, the day
the DJIA was down 3.6%. Another measure of volatility looks at the closing
price of the DJIA versus the previous day. On only three occasions in the
preceding four months did the index close up or down more than 1.5%. In August,
that happened five times. Volatility is disquieting, but provides opportunities
for traders. Investors should ride out churning seas.

The
media made much of the point moves in the Dow Jones, while paying less
attention to the less dramatic percent changes. Certainly, those few days were
enough to wake a complacent investor from his August slumber, but they didn’t
come close to setting records. Yes, the 588 points in the DJIA lost on August
24th exceeded the 508 points lost on October 19th, 1987,
but to be equivalent the Dow Jones would have had to have lost 3,700 points!

Before
the stock market hit speed bumps, the price of oil began to fall. By the 24th
crude futures had lost 19.6%, before rebounding in the final week to close 3.5%
higher. The Bloomberg Commodity Index, which is down 13% year-to-date, ended
August about flat. China
concerns regarding commodities abated during the last couple of days of the
month. Early in the month, China
devalued its currency by 2%, reversing a trend that had been in place for
several years. The Shanghai Index, which was already down 29% from its mid-June
high, lost another 12% in August. However, it is still up 46% from a year ago. China remains
speculative – politically, economically and financially. The Shanghai Index, at
its recent May high, was 13% below where it had been in October 2007, a
reminder that the news from China
is not really new.

The
Fed meeting next month will be interesting. Volatility in financial markets
prompted Lawrence Summers to write an op-ed in the Financial Times
warning against a rate increase. On the other hand, second quarter U.S. GDP
numbers were revised from plus 2.3% to plus 3.7%. At some point, the Fed will
have to raise rates. Doing so should help put the nation and financial markets
on paths to normalcy. It is my guess that doing so will be less painful than
feared.

Republicans
fielded seventeen candidates in the first debate of the season. They
represented a broad range of ideas, experience, character and age. Fox News,
which hosted the event, divided the assortment into two groups, based on
showings in the latest polls. Donald Trump, who was leading going in, came out
even stronger. The polls also boosted the prospects for two other
non-politicians, Ben Carson and Carly Fiorina. Polls, however, have lost much
of their predictive powers. The reasons may have something to do with the way
questions are posed but, more likely, lie in technology. Caller ID has provided
those receiving calls the option of not answering. Only the most adamant respond
to polls. On the Democrat side, Hillary is muscling through her self-created
slough of scandals. Her principal claim on the Presidency is that she is a
woman and it is her due. Mr. Obama, in looking for someone to continue his
agenda, finds himself caught between Hillary’s calumnies, a charismatic
Socialist and a prone-to-gaffe Vice President. They’re all old and they are all
white; and it’s all they have.

The
EPA, which never misses a chance to condemn the private sector for despoiling
nature, managed to create one of the largest environmentally damaging spills in
recent memory. Working in an abandoned mine in Colorado, they released over two million
gallons of toxic waste into the Animas River In doing so, the EPA changed the
clear waters of the river into a bright orange. Durango
and PlatteCounty were forced to declare states of
emergency. It took six days before the inappropriately named Environmental
Protection Agency took responsibility.

Immigration
is an issue in the United States,
but our problems pale when compared to Europe’s.
Wars and terrorists in the Middle East and Africa have caused tens of thousands
of refugees to seek asylum in Europe. Men,
women and children come across the Mediterranean on small, crowded boats, and
overland through Turkey
and the Balkans in the backs of trucks. An article in The New York Times
reports that thus far in 2015 twenty-five hundred have died in the attempt. In
August, in three separate instances, 771 died. Included were 71 whose bodies
were discovered in Austria,
in the back of an abandoned truck. The latter were escaping ISIS forces in Syria and Iraq and had paid smugglers between
€3,000 and €5,000 each.

A
chemical explosion in China’s
third largest city, the port city of Tianjin,
killed at least 150 people, with dozens still missing. Trigana Air, an
Indonesian airline and which has lost ten planes since its founding in 1991,
crashed in a remote mountainous area of Papua,
Indonesia
killing all 54 people on board. A bomb blast rocked downtown Bangkok, Thailand’s
capital and largest city, killing at least twenty and injuring dozens. Alexis
Tsipras, Greece’s
President, in the wake of a bumbled bail-out called for new elections in
September. And the United States
re-opened its embassy in Cuba.

In
an act of extraordinary braveness, three Americans and a Brit prevented what
would have been a mass murder by an Islamic terrorist aboard a train in France. The
three men – Spencer Stone, Alek Skarlatos and Anthony Sadler – charged and
subdued the would-be killer who was carrying an AK-47, a hand gun, a box cutter
and nine ammo clips. A British businessman, Chris Norman, lent support. French
President François Hollande awarded the four the Legion of Honor.

This
past August marked the 225th birthday of the United States Coast
Guard. On August 26th, 1920 the 19th Amendment was
certified, giving women the right to vote. It was the month of August, seventy
years ago, that saw two Japanese cities – Hiroshima
and Nagasaki –
obliterated by two atomic bombs, bringing an end to a war in which perhaps 60
million people died. For perspective, the world’s population in 1940 was about
a third of what it is today, and today’s nuclear weapons are twenty times more
powerful. President Obama celebrated his fifty-fourth birthday on August 4th,
the same day my younger sister turned 71. Fifty years ago this August the
Voting Rights Act was signed into law by President Lyndon Johnson. It was also
fifty years ago that this writer, straight out of Eastman Kodak’s training
program, went to work at the New York’s
World Fair. August 29th marked the 10th anniversary of
Hurricane Katrina. That storm, 400 miles wide, hit New Orleans with sustained winds of 100 to
140 miles per hour. When it was over, it left nearly 2000 dead and $100 billion
in damages.

August
was the month when the anti-Kardashian movement finally took off…maybe? Good Day Orlando co-host John Brown
walked off the set because the Kardashians were consuming too much of the
conversation. It was the month when Democrat National Committee Chairwoman
Deborah Wasserman Schultz didn’t seem to be able to explain the difference
between Democrats and Socialists. Speaking of Democrats, political correctness
caused the Democrat Party to sever ties with Thomas Jefferson and Andrew
Jackson, at least as concerns the annual Jefferson-Jackson annual dinner. The
sins of the two men, as slave holders, overcame their virtues, as visionaries
and populists. Vester Lee Flanagan, a mentally disturbed former on-air anchor
for WDBJ-TV in Roanoke, Virginia, shot and killed a reporter and
camera man. Flanagan, who saw himself as a victim, had been fired. He deliberately
shot Alison Parker and Adam Ward while they were on air. After posting on
Facebook his filming of the incident, he took his own life.

In
1975, the Alaska Board of Geographic Names changed the name of Mt.McKinley
to Mt.Denali, a name Athabaskans have always
used. Mr. Obama, just prior to a visit and upsetting Ohioans, made it official.
In a case where one hand doesn’t know what the other is doing, it was reported
during the month that Drones could be purchased at a kiosk in NewarkAirport.
It was also reported that at least fifty pilots had seen Drones in their flight
paths, while landing at New York
area airports! A mother panda in Washington’s
National Zoo gave birth to twins. Sadly, one died, but the other seems to be
doing well. Speaking of the Kardashians, Caitlyn (AKA Bruce) Jenner may face
man-slaughter charges for a woman killed in a chain-reaction crash in February.
A Canadian-built hitchhiking robot was destroyed in Philadelphia after two weeks on the road.
And, in a classy statement, former President Jimmy Carter, now 90 years old,
announced that his liver cancer had metastasized to his brain. He spoke about
his condition easily and memorably, saying “I’m perfectly at ease with whatever
comes.”

The
“Grim Reaper” appeared on August 9th and carried off former New York
Giant and sports commentator Frank Gifford at age 84. Six days later he
returned for Civil Rights legend Julian Bond at 78, an age that makes me
consider mortality.

So
ends the “Dog Days” of summer and heralds the arrival of September – a month,
because of school, that we will always associate with the start of something
new.